We finally get a post-BBA 2015 full-dress T. C., M Assets, LP, A-A-A Storage, LLC, Partnership Representative, 165 T. C. 1, filed 7/2/25, with Judge Ronald L. (“Ingenuity”) Buch getting the OK from 17 (count ’em, 17) of his colleagues.

M was selling off real estate and IRS was increasing Section 1231 recapture of depreciation. IRS wants partial summary J that the NFPA (Notice of Final Partnership Adjustment) was timely per Section 6235. “The Commissioner relies on Treasury Regulation § 301.6235-1(b)(2), which defines the period the Commissioner has to issue the FPA in the event a partnership requests a modification of an imputed underpayment pursuant to section 6225(c).” 165 T. C. 1, at p. 3.

Spoiler alert! IRS loses!

IRS audited, proposed changes, M riposted with a Form 8980 modification request, IRS bought all M’s requests, but then changed its mind and hit M with the NFPA with all the old increases, plus chops.

M claims IRS is too late with the NFPA, per Section 6235(a)(2). IRS says yeah, we goofed, but we’re timely.

Judge Buch lays out the new procedures in 165 T. C. 1, at pp. 8-9. First there’s a notice of proceeding to the Representative, who alone appears and can bind all partners. After audit, the Notice of Proposed Partnership Adjustment (NOPPA). Rep has 270 days to request modifications via Form 8980 with attachments; see 165 T. C. 1, at p. 9, Footnote 3, for a list of modifications. IRS eyeballs any modification requests and issues a Notice of Final Partnership Adjustments (FPA). Rep must petition within 90 days to USTC, Court of Claims, or USDC.

When a modification request of imputed underpayment under section 6225(c) is timely made, IRS must mail FPA no later than 3 years after the date that is 270 days . . . after the date on which everything required to be submitted to the Secretary pursuant to such section is so submitted. IRS has promulgated Reg. Section 301.6235-1(b)(2), which says date everything submitted is 270 days when partnership can request modifications; M says the statute says it’s when they actually submitted everything, as long as it’s less than 270 days after the NOPPA.

It’s time for the Supremes’ gift of discipline to tax law. Cue Loper-Bright.

“As applied in this case, there is a direct conflict between the statute and the regulation on which the Commissioner relies. Section 6235(a)(2) provides the period for when the Commissioner can make an adjustment for a partnership in the event a modification request for the imputed underpayment is submitted to the Commissioner. The plain text of that statute states that date is ‘270 days . . . after the date’ everything required for a complete modification request under section 6225(c) ‘is so submitted.’ I.R.C. § 6235(a)(2). The regulation interprets that date to be 270 days after ‘[t]he date the period for requesting modification ends.’ Treas. Reg. § 301.6235-1(b)(2)(i)(A). As is made evident in this case, those are different dates, and the regulation must give way to the statute.” 165 T. C. 1, at p. 13.

IRS claims statute gives broad authority to promulgate regulations. Yeah, says Judge Buch, but not to rewrite the statute that gives IRS that authority. And M never filed the Form 8981 waiver, shortening the 270-day cutoff. But M didn’t want to waive, and nothing in the statute says a waiver filing is necessary to shorten the 270-day cutoff.

IRS blew the cutoff.

“Factually, there is no genuine dispute that JM Assets submitted everything required to be submitted under section 6225(c) on February 14, 2023. That was the date JM Assets submitted Form 8980 to request modification of the imputed underpayment. At no time after that did JM Assets submit further information, nor did the Commissioner request additional information. And the Commissioner approved the modification request. Taken together, these facts establish that JM Assets submitted everything required to be nsubmitted with its initial submission. Under section 6235(a)(2), the Commissioner had 270 days from receipt of that submission to issue an FPA. The date that is 270 days from February 14, 2023, is November 11, 2023, a Saturday. Thus the 270-day period lapsed on Monday, November 13, 2023. See I.R.C. § 7503. The FPA issued on December 1, 2023, was untimely.” 165 T. C. 1, at p. 14.

IRS tries a goal-line stand, seeking to amend the answer to allege substantial understatement of income, triggering 6SOL. M says it did disclose the sale terms on its Form 6252 filed with its return. IRS says the understatement arose from the Section 1231 recapture. But misstating cost or basis isn’t an understatement; see Home Concrete and my blogpost “Colony Lives,” 4/26/12. No amendment to answer.

Once again, the famous words of Judge Cardozo echo in Tax Court. IRS threw to the wrong base, sending the SNOD for Moxon Corporation, 165 T. C. 2, filed 7/2/25, to an address other than last known address. Hence Moxon owes no tax, as it had no chance to contest liability and SOL had run.

But Moxon was a partner in AD Global, a TEFRA-era dodge, wherein the TMP stiped out the Section 6662(h) 40% gross valuation misstatement chops. Moxon is fighting a NFTL and a NITL for the chops, as IRS conceded collecting the tax.

But after somber reasoning and copious citation of precedent, Judge Goeke finds that while deficiency procedures and proceedings apply to affected items, now-repealed Section 6230(a)(2)(A)(i) takes chops out of the mix.

“…petitioner was obligated to report the tax at issue on its [years at issue] tax returns and was obligated to pay that tax at the time required by Congress. That petitioner generated tens of millions of dollars in purported losses through AD Global, failed to comply with its reporting and payment obligations, and then was fortunate in that respondent mailed the SNODs to an incorrect address does not mean that petitioner ‘was never obligated to pay [the taxes] in the first place.’ Petitioner’s argument on this point is based on a fiction and is unconvincing.” 165 T. C. 2, at pp. 14-15.

As with SOL, the government’s remedy may be gone, but the right remains.

Moxon owes the chops; while IRS’ blunder lets Moxon walk on paying the tax, it’s still owed, and the chops stick.

Judge Travis A. (“Tag”) Greaves, master of discovery, marries the 1982 Mel Gibson – Sigourney Weaver romadrama to Reg. Section 1.170A-13(c)(5)(iv)(F) in Carters Lake Land, LLC, f.k.a. Sassafras Point II, LLC, Piedmont Private Equity Manager, LLC, Tax Matters Partner, et al., Docket No. 1034-21, filed 7/2/25, lead case in a consolidated Dixieland Boondockery.

IRS served a blockbuster subpoena duces tecum (paper, not person) on appraisal firm Integrity, claiming their employee, whom I’ll call DM, wasn’t a qualified appraiser.

IRS wanted documents for years immediately prior to acquisition, acquisition, easement granted, and easement reported. Integrity claims this involves tons of documents, all of which its trusty attorneys need to scan for privilege and relevance, even after IRS offers a couple restrictive search terms (hi, Judge Holmes).

Integrity is down with providing documents relating to the three (count ’em, three) consolidated petitioners.

“Details regarding DM’s appraisal work, the clients he served, and Integrity’s relationship to petitioners are relevant to the issue of whether DM meets the definition of a qualified appraiser under section 170(f)(11)(E). This Court will allow respondent some latitude in its investigation to establish the relationship between petitioners and Integrity, ensuring the development of comprehensive legal arguments. The value and need for this information weigh against the motion to quash.” Order, at p. 5.

Except.

“Respondent’s request implicates potentially privileged information over a period of nearly four years. We disagree with respondent that such an extensive period is needed to determine whether someone is a qualified appraiser. Treas. Reg. section 1.170A-13(c)(5)(iv)(F) provides the relevant period — “the taxable year”. We will limit the temporal reach of the subpoena to the taxable year at issue. Integrity shall provide the relevant documentation for [taxable year at issue].” Order, at p. 6.

For the checklist for qualification and disqualification of an appraiser for Section 170 charitable giving, see Order, at p. 5.

Whatever you may lack at a CDP, paper should not be one. When the AO asks for documents, provide them. In this electronic age, storage should not be an issue; scanners and hard drives are cheap compared to a lien or levy.

Chad T. Mackland and Tina M. Mackland, T. C. Memo. 2025-69, filed 7/1/25, might have made out a case for CNC on hardship grounds if they provided the nine-page Fannie/Freddie Form 1003 loan application to the AO during the seven (count ’em, seven) months between hearing and confirmation of the NITL, showing attempt to draw on equity in home to pay down tax liability. T. C. Memo. 2025-69, at p. 8.

“Although the AO’s notes include a CNC code suggesting that collection of the liability would create a hardship for petitioners, the AO apparently determined, in requiring petitioners to borrow against the equity in their house, that the economic hardship exception did not apply.” T. C. Memo. 2025-69, at p. 12.

Judge Rose E. (“Cracklin'”) Jenkins says nonproof of attempt to realize on equity equals refusal to do so.

“Petitioners contend that the existence of a federal tax lien made it difficult to complete the loan process; however, there is no indication in the administrative record that petitioners made any request for the IRS to subordinate the tax lien under section 6325(d). In any event, any difficulty in obtaining a loan should not have prevented petitioners from providing proof of their attempts to secure the loan as requested by the AO. Although petitioners did not explicitly refuse to borrow against their home, and in fact claimed they were attempting to do so, their failure to provide any solid proof of their attempts could be understood as a refusal.” T. C. Memo. 2025-69, at pp. 14-15.